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Boston 31, China 31, Us 29, U.s. 28, America 18, London 8, United States 6, S&p 6, Washington 6, Europe 6, Rebecca Patterson 5, Fbi 5, Becky 5, Cambodia 5, New York 5, Eamon 4, Nespresso 4, Roger Wicker 4, Eamon Javers 4, Reed 4,
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  CNBC    Squawk Box    News/Business. Becky Quick, Joe Kernen, Andrew Ross Sorkin.  
   Business news and talk as the trading day unfolds on Wall...  

    April 17, 2013
    6:00 - 8:59am EDT  

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we've been watching u.s. equity futures. they are called lower at this hour. yesterday the major averages recovered about 60% of monday's steep losses. the s&p closed with the second best session of the year and the dow posted the biggest gain in seven weeks but this morning it's a different story. european shares starting the day in the red sinking for a fourth straight session among reasons cited by traders there's talk of a sovereign downgrade in europe. tensions in the middle east and a large program trade by an investment bank adding an erroneous trade on the german dax. as for commodities, the international energy agency says the recent drop shows the market is sufficiently supplied. oil prices down by three-quarters of a percent. gold prices this is what we're watching very closely. it looks at least at this point
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to be turning down once again down $2.70 after that rebound yesterday. last trade at 1384.70. the new highs -- the high set yesterday is still setting lower highs. we'll talk more about this in a few minutes. it did touch at the lowest level in more than two years yesterday. we're also going to talk to two commodity watchers in a few minutes to get more on this. before we do, andrew has this morning's top corporate m headlines. >> intel missing the street by a penny. revenues in line. the current quarter revenue will drop. the company citing a drop in pc sales due to growing popularity of tablets and smartphones. intel cfo on "closing bell" yesterday. >> a great lineup in products today in phones and tablets. we won 11 phone designs across
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20 countries. we're seeing with chips selling into those phones we're leading in performance and people who know intel expect us to lead in performance but i think what's surprising people is we're not just leading in performance, we're leading in power efficiency. >> marissa mayer at yahoo! may have explaining to do. yahoo!'s q-1 earnings beating the street but revenues falling short of consensus and it's forecast for the current quarter ref few below estimates. the internet company is continuing to feel the effects of declining traffic to the web properties and falling display advertising sales. in earnings central this morning, also bank of america will be posting quarterly results before the bell. the street is looking for earnings of 22 cents a share on revenues of $23.4 billion. analysts say the key to watch here is going to be the progress of the bank's cost cutting initiative. we'll bring you b of a's numbers when they hit the tape.
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>> to the latest on the tragedy in boston. investigators appear no closer to finding a suspect but they are learning more about the bombs that were used. scott cohn is in boston covering the latest. in washington, the senate shut its mail facility for the next two to three days after a senator mississippi received mail that tested positive for the poison ricin. eamon javers has that story for us. i think it was anthrax. it's so weird. scott, let us begin with you. good morning. >> reporter: good morning, joe. someone knows who did this. that's what the fbi says. now they are trying to figure out who that is and renewed their appeal to the public for any sorts of clues. was somebody in the days leading up to monday talking about the marathon in an intense sort of way? did anyone who was at the event see somebody carrying around a dark duffel bag which now appears to have been how they
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deposited the bombs at the scene. and at that scene they have uncovered some important clues and the photos are out. the first photo is of a pressure cooker or the remains of one that was used for at least one of the bombs, possibly both, filled with shrapnel. things like bbs and nails designed to do maximum damage when it exploded. now, how did this happen? how did they get into what is normally a secure event in order to do this? the police chief last night, commissioner ed davis, defended the security at the event. >> we planned this incident like we do every incident in the city of boston. we work very closely with our federal partners, the intelligence services. each incident is vetted very carefully. there's a specific plan put together. this particular plan was very well thought out and executed. and there were more officers assigned to this race than we've
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ever assigned before. and we were particularly concerned with the finish line this year and assigned more officers down in that area. >> reporter: why were they so concerned with the finish line? did they know of threats ahead of time? no. there was more people than last year and they wanted to have numbers that reflected that in terms of number of officers at the finish line. commissioner davis says a review will be done after this about what went wrong with the security plan but now the priority is the investigation and an investigation that is intensifying. and then of course there is that erie parallel to 9/11. eamon javers in washington has that part of the story. >> reporter: it's a potentially scary story up here on capitol hill. a letter with a granular substance intercepted at the senate. let me give you an update on what we know as of right now.
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the senate mail facility is the organization that intercepted this envelope containing a white granular substance a s they describe it. the preliminary test indicated the substance involved in this is ricin. the envelope itself was post marked in memphis, tennessee, with no return address and it was not outwardly suspicious at all. they suspended senate mail service and one of the things that we should point out here is that there's a possibility of a false positive test here with the substance ricin involved so they will have to be very careful about figuring out exactly what this is exactly where it came from but they advised other senators and members of congress up on capitol hill to be very careful here and as you were pointing out, this is sort of an erie echo of a senate mail incident following up on a terrorist attack. now, there's no indication that this one is in any way connected
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to the boston situation that we saw earlier in the week. they advise senators and their staff to be careful in the wake of this and authorities are investigating the fbi and the u.s. capitol police are on the case here, guys. >> i know you point out that there is a chance for a false positive in these tests. i heard that. my question becomes how much certainty do they have? one in two chance of false positive? one in ten? >> you are getting beyond my basic chemistry understanding. i would imagine what you're going to do here is go back and retest and make sure that they know exactly what kind of substance they're dealing with. the more tests that you have indicating a positive result, you have more confidence that's what you're looking at. they'll be very, very careful with this. as i say, they shut down senate mail service to all of the other offices. right now they briefed senators themselves on what to expect. for the senators this is a concerning time. they are aware that their staff handles a lot of incoming mail and there's a lot of stuff out there. they get a lot of hate mail in a
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general basis. a lot of anger in the country. that comes inbound to those senate staffers at the front desk and folks at the mail sorting facility. they are trained for that but this looks like it could be a real world incident that could be concerning. >> in terms of hate mail, they didn't say anything about getting more than they usually do. >> no indication there's any more than normal but in every day course of life in a member of congress's office, interns pick up the phone. most people that call are citizens with a point of view that want to make a political point. they do get on a day in and day out basis a lot of angry people calling really upset and calls that they describe to me as hate calls. people shouting. people yelling. a lot of anger. that's what they deal with in the mail as well. this could be an escalation of that. someone extremely angry and trying to do something about it. we'll have to see how this
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investigation plays out. >> years ago in terms of anthrax letters that were sent out, some were went to media organizations and others. any precautions that other organizations should be thinking about? >> not right now. this appears at least for now to be an isolated incident. they have told the other senators to watch out for this. they shut down senate mail. we haven't seen any other letters or anything to mail organizations. we have not been briefed by capitol police to change our systems with mail in terms of a media organization. for now you have to be careful with these things. >> it's easily manufactured from castor oil manufacturing waste and most famous if you recall for the umbrella that killed the russian. stock with an umbrella that had ricin in it.
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a few grains like table salt looks like, three or four of them is enough. the whole functioning of your body doesn't work. i was wondering where do you get it? doesn't seem easy to come by. it says that it is easily purified from castor oil manufacturing wastes. you find anything. the stupid pressure cooker was on a website. >> you can see how to do it. incredible. >> we'll check back in later morning. in the meantime, we need to get to london. >> time for global markets report. kelly evans standing by across the pond in london this morning. kelly? >> long time no see, andrew.
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if there's pressure on u.s. futures it may have something to do with what's shaping up across europe. a weak start to the session. we were actually a bit higher initially but we quickly have seen equities reverse and now the dax is one of the weaker performers. no real catalyst. there was some employment data out of the u.k. you can see the market under pressure down half a percent. it showed a decline in employment and increase in unemployment and importantly pretty weak average hourly earnings growth. some of the weakest earnings growth we've seen since records began. not a good attitude across the equities space. a couple names to draw yourn to. this is britain's biggest retailer. after releasing results that showed the first profit drop in 20 years, it is pulling out of the u.s. market and will take a charge associated with that. they tried to do a fast and easy trade but they say they can't
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see visibility on when that would become profitable. they are exiting the business. tesco shares taking it on the chin. a different story for burberry group. they said that asian sales were good and that men's wear was good in the fourth quarter. a different story than what we heard the other day. this indicates that chinese consumer is liking the kind of burberry products that aren't logo in your face. shares double digit decline a year or so back when they warned about asian demand and now a better sign despite the renewed concern about china elsewhere in the press this morning. the bond space isn't necessarily sell-off. it has a rally in spain and italy. we have yields falling to 4.6. 4.2% respectively. italy will try to get a president selected. that's not doing much to calm jitters among investors.
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let's look at sterling. that has been under pressure after that weak data suggesting the bank of england may do more down 0.6 of 1%. euro/dollar has turned weaker. in terms of the session today, attention in london here is focused on the funeral for margaret thatcher. it began a few moments ago. we have pictures to show you. it's happening in st. paul's cathedral famously designed by st. christopher loren. this is her granddaughter who is speaking now. we saw the funeral procession take place across london. there was a lot of focus on whether there would be protests and we heard reports of some booing along the route but as we followed it, it seemed like a somber affair and that's what she had wanted. this frankly is all the people are really paying attention to in markets at the moment. back over to you. >> thank you. watching that front row there
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with tony blair and other officials. we'll head overseas to beijing. >> i sat down with the chairman of china sovereign wealth fund. this is cic or china investment corporation managing about 500 billion in assets and big buyer of u.s. treasuries. i talked to him about a whole host of issues including investing in the united states and he said he would be interested in investing more in the u.s. if it wasn't for constant barrage of budget battles and suspicions of beijing's motives. >> we're very interested in the united states but we are sometimes concerned by the policies because some people in the united states blow out of proportion the national security issues. actually, we won't touch
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sensitive issues. we want to do something that would be good for the american people and good for chinese people. we don't do anything which would pose security threats to the american people. they shouldn't worry about us. >> people of course are very worried about china especially about the economy after the lower than expected growth numbers that we saw this week. and he addressed that. he was talking a bit about the concerns about rising debt levels and he played those down. he played down the weaker growth. >> i don't think people should panic about chinese economy will continue to grow at the sustainable level. the government's target could be fulfilled without much difficulty and we aim at the quality of the growth. i don't think achieving 7, 7.5% is a big deal for china. i don't think so. >> the fund invests heavily in resources. i couldn't help myself from
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asking him specifically about gold. he believes the sudden drop in gold is general instability in the global economy. he hopes it comes back at some point soon. >> thank you very much. we were watching that and that's the perfect segue. we've been watching what's happening and it's important to see what the chinese think about this and no better person than cic chairman. we'll talk about gold and what's been happening not only with gold but also oil prices after yesterday slumping to levels we haven't seen in years particularly for gold. matt turner is a precious metals analyst. i don't know if you heard that last interview and what thoughts are about gold. what do you think has happened here? >> good morning. we've had a bearish view on g since march. it didn't come as a surprise nor as extent but what did come as a surprise was speed an severity of it in just the l few days.
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investors have been buying gold for the last ten years really and some of those have now found better returns elsewhere. they are worried about the early ending of qe. they're worried about the possibility of central bank sales and some are getting out and such an important part of the market when they sell the price has to fall. >> are you still bearish after big declines that we've seen? >> the price target we gave for gold was about this level. the reason we gave it as a flaw was because we thought jewelry demand which was major other use of gold would start to take up the slack from investor demand. we have to wait and see whether that's happening. we have seen some early evidence that chinese and indian consumers are buying more gold but we have to wait to see how large this is. it could fall further, we might see a base here for now. >> there are stories out this morning in fta talking about how john paulson has taken a massive
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hit losing $1.5 million this year for being so long on gold. do you think you get to the point where people just get afraid to hold onto this and they have to cover losses at some point? >> it depends on why you were investing in gold. if you invest in gold for quick return you would be disappointed at the price performance. those investors have an insurance policy against worst things happening in the high economy might think it's worth hanging on. >> if we have to hang our hat on jewelry becoming more popular, whenever we talk about gold it's either that it is for the uncertainty or because of central bank's printing. if you have to come back to it's good because people are starting to like to make jewelry out of it, that's not what you think. it's supposed to be a hard currency. it's supposed to an the only currency left and it hasn't looked like that for the past two weeks. >> i think jewelry is still more than half of the market even in
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these times of high investor demand for gold. i think you have to see how the market balances between these two aspects. it's not a small part of the market. >> if 50% is jewelry and 50% is psychology. >> and central bank buying. and investors that buy it don't buy it to make jewelry. they buy it as a head. i don't know. i would hate to hang my head on whether it's popular in india at wedding season. >> i would say that's why we forecast the price coming down from 1,600 to 1,300. it depends on the psychology of the investors and indian wedding season. >> where is david on gold? >> i don't know where he stands now. kevin, let's talk about oil prices. this is more difficult to figure out direction and where things are going. lousy economic numbers affected
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the price. how much of this is lousy economic numbers and concerns about economic growth and how much of it is turmoil that we have seen sparked in places like the gold market? >> i think a certain part of this as you saw when you were up and anyone up on crude losing money somewhere else might be selling. 0.2 of a percent out of chinese gdp number doesn't make for $7 a barrel. we're below calendar year price target right now and you are getting to a point where the frontier oil, the most expensive oil in the world and opec will start to respond. if we get below 80 bucks things change. there's a natural fundamental floor. fundamentals are weak enough that we're coming aboute ining realty. it could strengthen on seasonal growth for demand but a downside to come as well. >> what's the downside? >> even if we start to reset back toward the seasonal growth for cyclical demand, we have a flatter slope. the world is getting more nis
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efficient even as we grow supply faster than anyone expected. the story that you had here black gold is just a nickname. this is industrial input. not a permanent store of value. when industrial demand weakens, it's not going to grow as fast in terms of its price. >> is $88 a fair price or do you think it should be lower? >> $88 is actually low for where we are this year. by the end of this year, they will add 500,000 barrels of capacity per day and up to almost 1 million in addition by the end of next year. we might see a handle for 2014. >> wow. for the course of the year do you think? >> i don't think we'll run through the year in eight handles. reset into the nine handle. as we go into next year, if things continue on this trend with demand, i think we're going to talk about eight handle oil. >> we talked to a lot of economists and had one yesterday that pointed out he thinks next year is going to be the year. we listen to him a lot.
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do you think next year is the year where we see more growth in turn what does that mean for the oil market? >> the problem with growth particularly when it gets to vehicle demand for oil is that you buy new cars and we buy them like crazy in the u.s. every new car sends an old car to the scrap heap. it flattens out that growth that you would expect to see. >> all right. kevin, matt, thank you both for joining us this morning. >> quick note. david einhorn lost $41 million in the past week and a half on gold. having said that, manages $8 billion. a little bit of a drop. >> i wonder how much coming down for six months not just in the last two weeks. >> i don't know the full number. we'll do the math during the break. >> it sounds like ricin. they show a picture. >> we're talking about pronounce ration? >> ricin.
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>> i'm getting people sending me audio of things. i do it and nothing happens. >> there's no speakers on the set. >> that explains it. >> while joe talks to the computer, we'll talk about yahoo! when we come back. the street's take on yahoo! results and one opinion on whether marissa mayer can get the company back on track when we return. acceler-rental.
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welcome back to "squawk." shares of yahoo! under pressure after the company's quarterly results more importantly the guidance. anthony, it's great to see you this morning. >> how are you doing? >> let's talk about tale of two cities. tale of two worlds here. they did beat in terms of actual earnings but revenue is what everyone is concerned about. >> sure. the display revenue line remains challenged. that's all there is to it. in terms of units, it's engagement which is down so a number of views and user engagement remains down but at a lessening rate. on pricing you saw a downtick down 2% and that was below people's expectations. >> you read the report and saw the forecast and listened to the call and you changed your estimates how, if at all? >> one thing i would note that i want to point out is that most of the value when you buy a share of yahoo! is in these
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asian assets. they own 35% of yahoo! japan and so that equity in the interest of those affiliates was higher than our expectations. those asian assets are on fire from our perspective. so it could be that the value of those asian assets are appreciating whereas value of core yahoo! is in this choppy challenged period until we can get some exciting products and services and better user engagement and better monetization. >> is your expectation they can still get there? >> it's early. you have to give marissa a chance to roll out interesting products. she's trying to improve and reinvigorate the mail yahoo! product. they made updates. she needs four to six to eight quarters to introduce meaningful new partnerships and products
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and you have to give a bit of that lag time before we see monetization of those products. it's still early. >> what's the upside/downside of the stock? >> upside is probably 15%. maybe 20%. >> when you say 15%, is that over the next 12 months? >> i would say over the next 12 months in the next 6 to 9 months we hope and once you get beyond those catalyst and hopefully capital returns and buybacks from the proceeds of that catalyst, you have given the core management team enough time to launch some new and improved -- >> give me the downside scenario. let's try to understand what the downside looks like. given the display advertising which was supposed to be the one thing they had going for them better than everybody else is clearly on the decline there and frankly up everywhere else. >> i think that the downside is
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over a one to two-year period from here an inability to launch products on mobile that really engage users and so that's it. if you can't regain user engagement and bring user engagement back to growth on the display side and mobile is integral to that, then in terms of pricing and volume on display it's going to be very difficult. >> is that something she has to do by buying other businesses. two weeks ago she bought this business from a guest that had come on "squawk." a disrupter. 17 years old. and you look at that. she's shutting that app down taking that technology and using it in some other form. can she really create value that way? >> she's looking to do small acquisitions of talent that will cost in the low tens of millions. those type of deals. by in large yahoo! has great assets and they have a brand name so a lot of it is really just taking what they have and
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taking engineers they have and improving the use case for yahoo! on mobile which in marissa's words incorporates checking news, weather, sports, those are things people do on their phones and they need to be there and get it right. it's a combination of small acquisitions. >> one final question and we'll let you go. you give her eight quarters. that's a long honeymoon in wall street land. does the rest of the world give her that much time? >> i think it's probably shorter than that in terms of the new products. i think six to eight quarters from the time she started in order to really have some good new products that are working and driving and then first users and engagement and then monetization because unless you have the impressions and clicks you can't really drive ad revenue. >> that's longer than ron johnson had. >> i know investors are impatient but we're trying to give marissa the benefit of the
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doubt. she has a lot of wood for chop and she's inhereiting organizational issues at this company. >> thank you very much. next time we'll have the marissa laugh track just to -- >> not that. >> remember last time we had him on we had the laugh track. >> thanks for having me. have a good day. when we come back, ford's attempt to go into overdrive in china. a live report from phil lebeau who is on the ground there. plus, the street's take on intel's results from last night. we're talking autos and tech when "squawk box" comes right back. ♪
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welcome back. a major car manufacturer is shifting production into high gear but not in detroit. in china. that's where we find phil lebeau and where the heck are you? >> it is about 1,100 miles west of shanghai. the gateway to western china. this is running red hot for ford in the hottest auto market in the world. take a look at the global sales last year for the leading auto markets by far china is way ahead of the united states. 19 million vehicles will be sold here dwarfing the u.s., japan, brazil and germany and for ford they got to keep up with demand here. that's why they are doubling capacity in china by 2015 going from four assembly plants up to
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nine. ford says china has become the second largest market for the auto company in the world behind only the united states. in fact, 40% of ford's global sales will come from china by 2020 which is why the ceo says china is becoming a greater focus for the company. >> i'm spending more and more time and our team is spending more and more time in china and it's just vibrant. the city is happy. the province is happy. the government investment is terrific. >> reporter: because of the stronger sales in western china, ford sales in the first quarter here in this country up 54%. it has passed toyota in terms of auto sales in china and ford says sales are growing three times faster than the overall sales -- >> it sounds like we're having troubles obviously phil is in
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china and as you saw that was 1,100 miles away from shanghai in the middle of china. there are difficulties. wait a second. i think we got him back. phil, are you there? >> reporter: i am here, becky. what we were talking about is how quickly ford sales are growing here up 54% in the first quarter. the bottom line is this. as ford adds two more plants here, what you're going to see is a rapid expansion in china by ford and that's why 40% of ford sales by 2020 will come from china. eventually china will pass the u.s. in terms of being the largest market in the world for ford. guys, back to you. >> that is kind of stunning to think about, phil. not in the distant future. you are talking six to seven years down the road where 40% will come from there. why did they pick that city? >> reporter: originally their joint venture partner was here
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and back in early 2000s, people said you missed boat. you want to be in shanghai and beijing. ford was there with a different joint venture and this part of the country was going to take off and it has. the sales rate is faster than on the east eaern part of the coun. this worked out for ford. when gm was doing early investment in china, people said ford missed the boat. that has not been the case. >> thank you very much. we'll see you throughout the day with more stories from there. >> there is hundreds of cities that you never heard of the size of chicago and bigger. >> 2 billion people. coming up, what intel's quarterly results tell us about the future for tablets and also these small laptops that are
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half and half. maybe that's what you need. >> that could be it. >> heading to break, check out the dollar this morning against the yen, euro and pound. [ penélope ] i found the best cafe in the world.
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welcome back. intel's first quarter results were off by a penny. revenue inline cautioning current revenue could fall by 8%. chris rollins, it's hard to be a tech company. i'm sorry people aren't buying
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pcs. you make chips that go into electronic devices that people are going to use. you have to be ahead of the curve. they're doing a good job in terms of satisfying the tablet market, aren't they? who is there first? >> apple. >> because it's an ipad. >> exactly. ipads there and other companies, google nexus is a big one. samsung has some coming down the line here. we'll diversify away from the ipad but intel is underrepresented there. >> what about these new half tablet, half pc things that are half clam shell but you can pull them apart. does intel have a chance to lead there? >> there are a number of factors. the one you're referring to is a convertible. they are really focused more on
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ultrabooks and sliders where you can actually slide the top display and flip it over and it turns into a tablet. >> they are expensive and haeav, right? >> some ultrabooks will be priced at 499 this year. that's a new low price point for them. >> the stuff with intel in that their bragging rights have to do with manufacturing process and how well they're doing there. is that a reason to buy the stock? when gross margins go up, i heard that you buy stock when margins are rising and sell it when they're going back down. are either one of those factors enough to offset what's happening in pcs? >> a sticking point with investors right now is the cost of manufacturing. it's $13 billion this year was their original estimate. they just lowered that to 12. still extremely high right now.
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and that will eventually have to be depreciated. >> i thought they had a good excuse that they are getting better and better at doing this efficiently. i saw something in the report. >> it's becoming increasingly more difficult to shrink chips. it's becoming increasingly more expensiv expensive. >> are we reaching the limit? >> no. >> we're going to go smaller. >> is there a limit? >> there has to be a physical limit at some point. i'm not about to approach that subject on this show. >> but you could on some other show if you wanted to. just not with us. >> what i will say is this. the price of manufacturing. the processing power of a chip
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goes up. what we're finding is that capex costs to manufacture these are also going up. >> that makes sense. you could do it you just want do it effectively and efficiently. >> it's costing a lot more for that same product. >> has intel -- have they been on the wrong horse here? is microsoft really their problem at this point? >> it's partially microsoft. they do have phones where they diversify away from microsoft. pcs are a problem, yes. tablets are a huge part of the market right now and what's left for pc are people looking for work stations and looking for content creation. >> are they with google chrome for example on some of the android tablets? are they supporting any of those? >> not really, no. they are going to google chrome will be left to other
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players out there. >> same thing for android? >> that is android. >> are either of these numbers ambition? both gross margin forecast and revenue number normally conservative. he sort of implies that both of these numbers are ambitious. is there a reason to buy the stock? >> they are fairly ambitious. it was a tough 1-q in terms of gross margins. also in terms of revenue because it was a little bit soft they maintained guidance for the year. they are really back end loading the year here and there's really no great catalyst in the back half of the year that are are going to help them here. i would agree with that statement. >> i got to say. he's not really taking a victory lap but pointing to great things the company is set up for in the future. intel is not going away. we know that, right? >> they have an amazing data
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center group. and as more and more work loads move into the cloud, they'll benefit there. there's no doubt about that. >> okay, chris. thanks. we'll see you later. add that to my list of things to worry about. >> running up against the limit. he says sliders and i think of white castle. >> i won't even try it. you don't eat sliders? >> i used to in high school. >> that's old school slider. >> now everybody sells sliders. >> steak sliders. you're at the parties on upper east side where they have fake coby beef sliders. this is not coby beef. no one has mistaken white castle meat. i use meat in the loosest sense of the term. i'm kidding. i love it. i won't go where you have. >> i haven't had one since high
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school. >> you called it a kfc cat in china. >> i almost ate kfc in a vietnamese airport. >> what do you mean almost? >> she told me i couldn't. >> she tells you a lot of stuff about what you can and can't do. >> let's go to commercial break. >> you should see me stand up to her. >> we know the boss in the house. >> gold prices falling again this morning. we'll talk to the world gold council after this and at the top of the hour "squawk" is in session and we'll be joined by u.s. senators reed and king talking to us about homeland security issues after the boston marathon bombing and a letter to a colleague testing positive for poison. stay tuned. we'll be right back. [ male announcer ] there are people who find their own path.
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welcome back, everybody. the plunge in gold has everyone wondering what comes next. jason, you tell us what you think is coming because it has been a big drop. there are some people who think because of technical reasons now it'll go even lower. >> well, you know, i think in our conversations with investors, we're basically pointing out that they should look at gold a little bit longer term and not try to trade it intraday. we think the selloff caught obviously the market by surprise. we think that was concentrated. we're seeing it kind of bounce off those lows. and the reasons for holding gold in a portfolio rather than
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looking at it in isolation remain as valid today as they have last week. which are diversifying portfolio and then hedging against inflation and currency devaluation. >> you mentioned yourself that you're trying to tell people they shouldn't be trading this on a day-to-day basis. do you think there's a lot of fast money in gold that is doing just that? >> well, i think, it's a very diversified market, we know that, and yes, there are hedge funds as you noted earlier that trade the gold market. we saw most of the selloff friday into monday was executed in the futures markets. one thing important to note is that gold unlike most other commodities, the vast majority of gold is traded in physical form in the spot market in london rather than futures. and i think what we're realizing now as gold comes back off its traded lows is that the demand picture around the world remains
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as robust as it was. >> what price is justified by gold's fundamentals? and he comes to $800. it's nice to diversify if you want to include losses and gains, if it's $800 or not, you don't want to buy it at $1,400. >> you know, our perspective is that instead of looking at expected return of gold in isolation, looking at what it does at the portfolio level. so what we do is try to help investors understand what are the merits of gold investment regardless of the price point over long periods of time, right? and i think, you know, the corner stone of the hedging argument is evidenced in 2008. we were all told that we had very broadly diversified portfolios that would withstand any shocks. >> where was gold in 2008?
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>> around 800. >> i guess you saw a massive run-up based on a lot of dislocation, a lot of concerns, and a lot of massive economic disruption. what do you think the fair price is today if it's not 1900, if you don't think it's $800 anymore. >> you know, where it's trading in this spot market is the best reflection. >> that's on any given day. if it was trading at 1800. urban harvey came up with this index. and they -- to estimate the fair value, they calculate a ratio of gold inflation going as far back as they were able to obtain data. the average over time has been 3.2 to 1 versus the price to earnings. that's how they calculate it. they've got an analytical way instead of 800. >> there it is. >> we've got to run. but it's a conversation for another day. coming up, we'll talk bank of america and homeland security when we come back. change makes people nervous.
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i can feel the difference. i'm a believer. i'm back working out. i'm a believer. try dr. scholl's active series. i'm a believer. bank of america is reporting the numbers 22 cents. the first number that the company is giving is 20 cents a share, net income of $2.6 billion. i haven't seen at this point. i haven't gone into the -- we're very prompt. it was right at 7:00 a.m., and they haven't gone into the release to see whether there's any special items that put it 2 cents below expectations. here's some of the other numbers of provision for credit losses got much better, it was 1.71 billion versus 2.42 billion.
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the revenue number was 23 -- it's hard to see, 23.5 billion. and sometimes you get more than one revenue number for this too. but that seems to be above expectations for where wall street was there at 22 and change for bank of america. the stock is indicated a little bit lower at this point, down about 8 cents or so. that is a current quote you're seeing there at $12.20. it's been, you know, it's been a big performer over the past 12 to 18 months or so. but still a far cry from where it was, obviously, back before all the trouble a couple of years ago. so at this point, revenue looks a little bit above, but the net number looks like it's 2 cents below if there aren't any special items. a 2013 capital plan actions will begin in the second quarter of this year the company says.
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>> the company. i'm looking at some of the comments now from the cfo who said they did reduce noninterest expense on a year-over-year basis. also says that credit costs continue to decline. >> here's a net -- yeah, on a gaap basis $23.5 billion total revenue. fractional losses so far in bank of america. tough at this point to compare it to what we saw -- >> what's the mortgage lending business like? because that was the issue with wells -- >> they say four straight quarters of steady growth in mortgage originations. they do talk about some of the other businesses too. solid increases to middle market companies. and what they're calling record earnings in wealth management. another quarter near the top in investment banking fe those are the things they're kind of pointing out as their highlights. but the question in terms of mortgages say they're in four
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straight quarters of mortgage originations. >> doing well on bringing down expenses, noninterest expense down $1 billion. this from their project bac initiative. there also seems to be one component of this that is an -- there's $900 million expense for incentive compensation. affecting that number, making it look worse than it is. >> the stock is down now. >> if we look at it, it's 11.92 to 11.95. that's a fairly big move, that's a 2% move. there's the revenue number that would be fine. but i didn't see that estimate that high for the current quarter. yeah, there it is. 23.4. so it is a little bit above, but not as much. we have a programming note. a closer look at the state of the banks tomorrow on "squawk box." we will have wells fargo chairman and ceo john stumpf
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starting at 7:00 a.m. eastern. and hopefully he's got good reasons for that check he got. i know you'll ask him. >> oh, oh, the compensation check. >> you saw -- >> i saw him. and a nice amount of money. >> you think it's okay? >> i like when people do well. >> so you're not one of these journalists that seems really jealous and envious of ceo or wall street pay. >> not at all. when you deserve it, you deserve it, when you don't, you don't. one note on b of a. >> earned success. >> litigation expense has been a huge issue for them because they've taken some -- >> can you tell how well merrill is doing? i think their wealth management business. >> is doing very well. >> yeah. >> a harder part is investment banking business. >> the investment banking. >> we saw yesterday with goldman
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sachs. >> global wealth investment management. >> litigation expense is down, $881 million in the first quarter of 2013. people will be watching that number. >> let's take a look at some of the other headlines this morning. first of all, check the futures because after the moves we've seen in the market recently, this morning, we are looking at red arrows once again. monday was a big down day, down by 265 points for the dow. yesterday, a rebound of half of that. right now, though, giving back again. with red arrows but also for the s&p where the futures are down about 11 1/2 points below fair value. other stories we've been watching this morning, yahoo, that company coming out with quarterly profit of 28 cents a share. that was 14 cents better than the street was expecting. but revenue was below the consensus as the revenue projection for the current quarter was, as well. that's because of declining sales of display ads. intel earned 40 cents a share per quarter, and intel is also
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forecasting a second quarter revenue decline because of slowing pc sales. although, it is maintaining its full-year revenue forecast. and american airlines is expecting near normal operations today. that comes after nearly 1,000 cancellations and a similar number of delays yesterday due to an outage and its computer systems. andrew? >> federal authorities intercepting a letter containing the deadly poison ricin. we've gone back and forth on how to pronounce it. sent to senator roger wicker's office. it triggered more concerns just one day after the terror attack in boston. eamon javers with more on the story. eamon? >> good morning, andrew. it's a scary situation up here on capitol hill. at least a potentially scary situation. let me give you what we know so far. the senate mail facility was the entity that actually intercepted this letter. they say the letter contained a white granular substance. the letter was addressed to senator roger wicker, a republican from mississippi.
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and the preliminary tests, anyway, indicated that the subject, the substance was ricin involved in this situation. the letter was most parked from memphis, tennessee. it didn't have any return address, but it was not otherwise outwardly suspicious at all. the senate mail service has been suspended. they do say, however, there's a possibility of a false positive test here. and obviously authorities are going to be going back carefully through the chemistry here to figure out whether or not they're actually dealing with ricin. one senator has said that she has a suspect in mind. somebody who sends a lot of angry letters to capitol hill. she said, anyway, claire mccaskill of missouri said that might be somebody of interest here in this situation. and guys, as you know, those members up on capitol hill get a lot of angry mail all the time. but this would represent a serious and dangerous escalation if it turns out to be ricin.
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and the eerie parallel here to september 11th, we saw the anthrax scare on capitol hill and media companies around the country. this sort of smaller version, but seemingly very similar to that kind of a scare, guys. >> very good. iowa ma eamon, yeah. history always rhymes, doesn't really repeat. senator jack reed, and senator angus king, as well as the u.s. select committee on intelligence. and senator reed, we've talked about other people have talked about the eerie coincidence. there's no reason to think this is in any way related to anything that happened at boston, right? >> there seems to be no correlation between what happened yesterday at the mail facility and what happened in boston. completely independent activities. >> okay. as far as what we're now talking
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about, senator, with the -- with what happened in boston, are we -- we went from we're all americans and we're rallying around it, but now we're starting to wonder how it happened, i guess. and with so much security, at this point, does it indicate that there was some type of lapse in your view, senator? >> i think the boston police did a very thorough job. they swept the route. i think they are probably looking back at things they could and will do differently. in fact, not just the boston police, but anyone managing a major event like this. particularly the open access of this venue. and i think also too, there's a factor that, you know, since 9/11 individually we are conscious of the possibility of terror but not as acutely as we were in the days following 9/11. i think precautions were taken, no indication of intelligence suggesting there was a planned attack. they did their procedures and they responded significantly,
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magnificently in terms of the face of the attacks. >> senator king, that's another thing that -- there's no indication there's anything beforehand. but then, you just hear some of these anecdotal stuff that you see in the media that it seemed like there was a more emphasis placed on the finish line and came back and said, well, because last year there were so many people at the finish line. and then there were people saying there were bomb-sniffing dogs around at the finish line at that point. absolutely sure there was no heads up on this, right? >> well, nothing that anybody has heard or mentioned. and i don't have any -- i think if they had any kind of knowledge like that, we'd know about it most likely at this time. i think one of the things up there was, i believe that last year was the biggest year they'd had. >> yeah. >> they had a huge crowd and that was the reason they did the extra precautions this year. you've got to think about it.
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how do you control access to a 26-mile long event? . you know, there are people all along that route. all the way from hopkins. so this is one of the problems. it's not a closed event like a stadium or something like that where they can check everybody and their backpacks as they go in. it would be practically impossible to do that in this case. so, no, i don't see any indication that anybody had any tips. just certainly doesn't seem to be the case. if there had been, there probably would have been more security right there around the finish line. let me mention something before we drop off. there's almost undoubtedly a picture of this person somewhere. it's probably on someone's iphone or in a computer. and 1-800-call-fbi is the number. and they are looking for pictures of your friend finishing, and there may be the person in the background.
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so this is going to be one of the ways that, you know, people can help. anybody that was there that has pictures of somebody finishing or standing in front of the finish line or in that area, chances are somewhere out there in america today on somebody's iphone is a picture of the bomber. >> senator, are you worried that the trail has gone cold in the sense that at this point even yourself, you're asking obviously viewers and others who were there to send in pictures that may ultimately lead to something. but it also -- it also suggests that we are very far from figuring out what happened just with the apparatus that we have there. >> well, i don't know how far or near we are. we had briefings here yesterday with the head of national security and the head of the fbi and homeland security. and, you know, they're in the middle of an investigation. i think one of the biggest areas they want to do is to review a couple of terrabytes of security
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camera film in various buildings and offices and banks and everything else along the route. it just takes time. an investigation like this takes time. nobody's claimed responsibility. and, you know, you're talking about a needle in a haystack. but you've got enough people, you're going to find that needle. >> i know there's a signature on a lot of these things. we keep hearing about that. and we're learning about this, probably, you know, as we hear media reports. i certainly don't know about signatures. but supposedly it may have been a pressure cooker that had normal, i guess, gun powder. it wasn't c4. not rudimentary, necessarily, but maybe not sophisticated either. is there a feeling it's leaning toward domestic? or we have no idea? no feeling either way at this point. >> they have not excluded any
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potential source of the bomb. the bomb appears to be a pressure cooker. they have pictures of fragments of a pressure cooker. they believe it wasn't sophisticated explosive, probably black powder, there was obviously small nails, bbs to create more injuries. this type of device has been used for decades across the globe in different parts of the world. it's been referenced on websites of both right and left extrem t extremis extremists. so this type of improvised explosive device is not unique. what they're looking now meticulously in the forensic analysis is whether they can recover dna, a fingerprint, a serial number, a fraction. anything that might indicate who produced the pressure cooker and where it was distributed. and from there, they'll follow on. to echo angus' point. i too believe of the thousands and thousands of cell phones and cameras and -- that were present
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there. there is a picture that the authorities could, in fact, link particularly since they've also determined that the bombs were transported in black canvas backpacks or a sack. putting that together and other information, i think it's going to be a long investigation. but i think they will begin to whittle down suspects and begin to move. >> senator reed, though, at this point there's no indication or any clue or hint from anyone as to whether this is home grown or terrorism from overseas? >> absolutely not. again, this type of ied has been used throughout the world. it's been used by different political factions. there is a -- there's this notion of a lone wolf that could have a domestic complaint or an international connection. nothing's been ruled out. the fbi, the -- all of the security agents and police authorities are taking this one step at a time, building a case.
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and i think also too, in addition to asking for photographs, there are probably people in the boston area that either have evidence or credible suspicions about the behavior of people. and they should come forward and let the authorities understand and put that in -- as part of this matrix. trying to discover who did it. >> all right. senator reed, senator king, thank you for your time this morning, we appreciate it. >> thank you. >> we'll hope for the best here. >> it's a tough story. before we go to a break, let's take a quick check of the futures right now, see how things are setting itself up for the day here. we do have a mix -- not even a mix anymore. red arrows across the board. dow looks like it would open off about 98 points, and the s&p 500 off about 12 1/2 points. let's take a quick look at bank of america this morning. the company just reporting moments ago. and you're seeing those shares trade down almost 3%, pre-market action.
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we'll talk to an analyst about that later. despite gains yesterday, the dow transports down about 3.5% for april. that's left many wondering if it's a sign of a pullback for the broader markets and economy. we've got csx ceo michael ward here to talk business and the state of the economy. "squawk" is back right after this break with michael.
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welcome back, everybody. volatility in the dow transports causing some worry among market watchers. the transports surged 13% in the first quarter of 2013. they are down about 3.5% this month, maybe not a surprise, though, given the big, big gains we saw in the first quarter. let's get a read on what many consider an economic bell weather. joining us michael ward, csx chairman and ceo, the company just releasing better than expected earnings after the bell. and, michael, the numbers that you came in with were better than the street was expecting. but what i'd like to hear is what you think is happening in the economy. because you have a very good feel on what's really happening in the u.s. economy. what's your take? >> well, becky, as we look at the economy, we think overall we're still in a slow growth mode. 1% to 2% kind of growth in the economy. we're seeing, as you know, we have some challenges in the coal market where the inventory's a little high. >> yeah. >> if we exclude coal revenues in the quarter, our other revenues were up 5%. we're seeing some vibrancy.
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what i'm really pleased about is we had great safety during the quarter for our employees, excellent service for our customers, and our productivity came in very well. as a matter of fact, we started the year thinking we would have $130 million of productivity, we now expect to be in excess of $150 million. >> why? what happened? >> we're just running very well. so as we run more efficiently, we provide better service of the customers and it's a better cost profile. so as we see the economy continue to rebound throughout the course of the year, we think that translates into some nice earnings. >> yelling at people, telling them no lunches. making them work until 8:00 at night, things like that, michael? or no? >> no, we never yell at people at csx. we work cooperative with our employees. >> yeah, right. got the whips out. >> michael, it's great news that other revenue if you strip out coal would have been up 5%, but the coal revenue down 13%. i should understand this better. what's happening? you were mentioning higher inventories. this has been a problem for a while.
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>> yeah, it's a different story than last year. last year, natural gas prices hurt our domestic coal business. >> okay. >> and the impacts of that are baked in. what we're seeing now are excess inventories, especially in the southern half of the united states. the need to be worked off during the course of this year. and we expect that overall domestic volumes down 5% to 10% for the year. they were down 15% in this quarter. we think it moderates as the year goes on. >> is it excess inventory because weather was warmer than expected? or was it excess inventory because there was less demand from some of the things like industrial demand? >> no, actually, the demand was up a little bit. i think about 3% of the demand was up. it was excess inventory from last year where there was a very mild winter as you may recall and natural gas was displacing coal when gas was down around $2 a million btu. it's now more in the $4 range which is mitigating that somewhat. >> let's run through some of the other things that you carry, things like chemicals, grains,
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cars, any of these big items. what are the best performers? and what are some of the weaker performers. >> we have great performance in the chemicals market. and two things are driving that. one is frac sand, going into the shale plays as well as beginning to see crude oil move from the bakken shale in north dakota. and i think we're up about 11% in volumes in chemicals this quarter. secondly, our domestic intermodal up 5% in this quarter. we have challenges in the agricultural market. two things, you recall there's a very weak crop last year, which is impacting some of the feed movements. and secondly, ethanol usage is down because there's less gasoline being burned due to less driving miles as well as better fuel efficiency in the automobiles. the automotive market itself, we continue to see strength there. as you recall, last year, went up from 13.9 to 15.3 million
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late vehicle production. and the expectation it'll go up to 15.9 this year. so we continue to see strength in the automotive side. >> basically from your perspective, we are not seeing much of a slowdown in the u.s. economy? >> no, i think it's the same slow growth we've been seeing basically for the last two years, becky. >> but there's not the spring swoon that some people have worried about. we've worried about that with the jobs numbers we've been getting recently. >> we're not seeing that in our movements on the railroad. >> wow. if you look at the rest of the year, you think it's going to continue to be chemicals, some of the biggest drivers? >> i think chemicals, i think later in the year as the new crop comes in, agricultural pick-up. we expect automotive to be strong throughout the year. so overall, we expect whatever gdp we will grow at a faster rate than that. >> all right. michael, congratulations on the earnings, and thank you very much for joining us. >> thank you. and coming up, the first images of the bomb used in monday's terror attack in boston. the pieces could provide
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critical information in the investigation. we'll get an update from boston. remember that atlanta bombing was 1996. all kinds of stuff went on before they finally figured out it was three more bombings by the year. >> took years. and then a cloud-based company poised for takeoff. why one portfolio manager says investors should take a hard look at a company called workday. i know what you're thinking... transit fares! as in the 37 billion transit fares we help collect each year. no? oh, right. you're thinking of the 1.6 million daily customer care interactions xerox handles. or the 900 million health insurance claims we process. so, it's no surprise to you
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welcome back to "squawk box," everyone. in our headlines this morning, we're keeping an eye on bank of america. the bank reporting quarterly profit of 20 cents a share. revenue, though, were slightly above wall street's forecast. profits came in at four times that of a year earlier on lower expenses and less money set aside to cover bad loans. also, mortgage applications
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up 4.8% last week. that number was led by demand for refinancing as average 30-year mortgage rates tick slightly lower to 3.67%. and toyota says the worldwide sales of the hybrid vehicles have exceeded the 5 million mark. they begun selling the prius back in 1997 and hybrids make up 14% of toyota's global sales. let's get a check on the markets this morning. the futures are indicated weaker. wow, at this point, in fact, we have triple digit losses. down by 102, this has been a seesaw of a week. the dow down by 265 points on monday, regained half of that ground yesterday. keeping an eye on oil prices that has dropped by just over 1%. 87.69, back below $88 an ounce. the 10% is yielding 1.705%. and the dollar this morning,
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it's interesting to keep an eye on the euro. the euro has been trading a little bit weaker against the dollar. right now the euro at 1.3129. and gold prices, this has been the biggy because after, again, massive swings this week where gold prices were off by more than 6% on monday or 8% on monday at the end of the day. on tuesday, a very slight rebound. and this morning, back down by about 1% dropped to $13. we've got other news this morning following the terror attack in boston. security was increased in london for the funeral of former british prime minister margaret thatcher. crowd started gathering outside in london earlier this morning to watch the funeral procession. the former british prime minister was given a funeral with military honors. however, it was not officially being called a state funeral. when we return, we've got new developments in boston and the investigation into monday's terror attacks. "squawk's" coming back after this. ♪
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welcome back to "squawk box" this morning. federal agents continuing investigating how the boston marathon bombing was carried
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out. and live in boston with the latest. good morning, scott. >> reporter: good morning, andrew. you can probably tell from traffic around me that boston is starting to come back to normal. but still, a couple of blocks behind me is a very complex crime scene still sealed off. it's about 12 blocks long. and it has -- it has been of use to authorities. it's a good thing they sealed this off because their search is yielding some very critical clues. they include fragments of the explosive device. you can see the remains of a pressure cooker, which at least one of the bombs is made out of. filled with shrapnel, nails, bbs, things like that to do maximum damage. and apparently carried around in a black or dark duffel bag made of nylon. they found fragments of that, as well. authorities say they are getting what they call a tremendous response to their request to the
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public for video evidence or any other things. but they say they still need more. >> at this time, there are no claims of responsibility. the range of suspects and motives remains wide open. importantly, the person who did this is someone's friend, neighbor, co-worker or relative. we're asking anyone who may have heard someone speak about the marathon or the date of april 15th in any way that indicated that he or she may target the event to call us. someone knows who did this. >> reporter: someone knows who did this. but at least according to what authorities were saying last night, they don't know. they stillon't know whether it was home grown terrorism or whether it was foreign. the idea of a pressure cooker bomb is not new. they've been used elsewhere. they've been used overseas in south asia, in the ira used them. but there's also a possibility
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that it could have been domestic because the pressure cooker bomb idea is in a lot of so-called terrorism handbooks that are available online. so authorities are still trying to figure out who did this. and again, appealing to the public for help. guys? >> scott cohen in boston, thank you so much. we'll go back to you throughout the day. joining us now the former deputy director of the cia's counter terrorism center. good morning to you, phillip. >> good morning. >> talk about the hallmarks, trademarks, if you will, of at least what we know now about these bombs and explain if you could, do you have any sense of the type of people who could be behind this? just from looking at what we know? >> i think some of the public discussion on this is a bit misdirected. people are focused too much on who did this and we don't know now. my initial response having done this for 20 years in government is it tells us more about who did not do this. what we saw in europe and partly in new york after 9/11 was
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groups trying to build backpack bombs, but with a different make-up, composition than this device. issue two in contrast to what we saw in the past, these groups in places like the madrid subway seven, eight years ago and london in 2005 were going after iconic transport targets. obviously we have neither a transport target here nor do we have something globally as iconic. not as iconic as a subway. i look at this and say i'm not sure who did it, but i don't think it's the guys i've watched for 20 years. >> if that's the case. when -- if you were starting this investigation right now, what would you be doing? >> i'd be looking at big baskets of information. the american people want to know who did it. if i'm an investigator, an intelligence operator in this investigation, i want it open in three big areas, people calling in, witnesses, people i can talk to. the second big area is the video piece you're talking about. and the third big area is people
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who might have seen something on the scene. that is somebody who was actually standing there and might have witnessed somebody leave a bag. >> philip, you mentioned you don't think this is the guys you were following for 20 years. maybe you could tell us a bit more about who those people were. and then i guess my other question for that is what makes you think they didn't change their tactics since what they were trying before didn't work? >> a couple of things strike me here as pretty interesting. when you look at the people we chased around before 911 and after 911, they had characteristics including many times traveling overseas for training, which immediately increase their operational capabilities. it led them to build more sophisticated weapons, which we saw in london/madrid, which we saw almost in time square you'll recollect a few years ago. it led them to think about targets in a high-end way. led them to think about targets that would appeal not only to a network like cnbc, but to al
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jazeera. and i don't think the boston marathon meets that mark. so i look at this and say doesn't look like the guys, as i said before, that i used to follow. now as you suggest, they might have changed tactics. if they did, what this tells me is what we've been saying for at least five years that their capabilities have degraded substantially. if you have one shot, and this is it, i would say despite the grievance we have for the loss of life, this is not a great shot. >> is it the abilities have degraded. or is it that our security has gotten better? they're now having to focus on what you would consider lesser profile events. having said that, the human tragedy is real? >> there's got to be two dimensions. first, if you look at the organization we faced on december 12th, 12 years ago, what we faced bears no resemblance. they are crippled. and around the world in africa
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and the middle east, they have capabilities we sometimes overvalue. they have been degraded, but certainly, when they look at targets, they look at things like what's the increased security around a target. not just around some place like the u.s. capitol, but a bank or train station. if the security's tough, they're going to go some place else. >> we heard the security was beefed up, at least, by many accounts this year at the boston marathon. that there were dog sweeps, bomb dog sweeps that went through. >> yeah. >> why would they step up that security? is this trying to deal with more and more and of a threat? and realizing more and more of a threat all the time? >> i don't think it has to do with more of a threat. just our acknowledgment that we live in a different world. i think the threat's declined substantially. i'd go own to say, step outside when you're walking to the bus station and look at how many garbage bags are around, cans around, people walking around with a satchel or backpack, how many vehicles are around and people around and multiply that
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by 26 miles. >> philip, that makes you think that something like this could've or perhaps should've happened before. is the fact that it hasn't a function of better security? what do we equate that to? >> we destroyed this adversary through going after them overseas in afghanistan, pakistan, indonesia, saudi arabia, yemen and you name it. second, we spent a lot of money hardening the border. you get into biometric passports which are tough to forge. and if they made it inside these borders, any time any threat came into the bureau, i don't care if it was somebody who said grandma's got a nuke under the bed, we're going to chase it down. >> philip, real quick, if we could do more, if you think we should be doing more, what would it be? >> we should not do more. we should focus on things that are a threat to american culture, drugs, guns, child porn, and not worry about chumps who can kill two people after 12 years of a counterterrorism campaign.
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>> philip, an interesting conversation. thank you for joining us. we hope to talk to you as the investigation progresses. >> my pleasure. >> thank you. coming up next, we're going to try to figure out what's working now. three names and three sectors that might work. including a biotech company with a drug to fight a rare form of leukemia. futures none too positive, down 108 points. [ male announcer ] here at optionsxpress, our clients really seem to appreciate our powerful, easy-to-use platform. no, thank you. we know you're always looking for the best fill price. and walk limit automatically tries to find it for you. just set your start and end price. and let it do its thing. wow, more fan mail. hey ray, my uncle wanted to say thanks for idea hub. o well tell him i said you're welcome. he loves how he can click on it and get specific actionable trade ideas with their probabilities throughout the day. yea, and these ideas are across the board -- bullish, bearish and neutral. i think you need a bigger desk, pal. another one? traders love our trading patterns,
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welcome back, everybody. biotech real estate and software services stocks are the highlights of our what's working segment today. joining us now to tell us why is mark lehman president of jmp securities. and you say the selloff we've seen in stocks. you say this rally is still intact and not a surprise to see something like this. >> it's really not. we had a great first quarter. april started well, and i think you're going to have days like we had monday, obviously. there's some other noise in the week that's quite tragic. but i do expect the market to be better through the year. but, again, we're going to have ups and downs and monday started that. >> you think we've seen the majority of the gains packed into the year? >> i think we've seen a lot of the gains.
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we'll have probably a duller second quarter. profits will be watched closely as the month progresses. i think the continued pick-up in the economy is a tone that will continue through the rest of the year. >> let's talk about some of the stocks you like in particular. with software, you like a company called workday. >> we do. workday's erp software company started a few years ago by the management from people soft, a big company. and they were extremely -- the management team came back and a few years ago started this company. it's extremely highly valued. it's not for the faint of heart. but if they even control small percentage of the market they hope to obtain, this is going to be a big story over the next three to five years. >> you say highly va >> it is very highly valued. >> north of $10 billion market cap, but if they gained 5% of the market in the next five years, this stock and the market cap is going to go a lot higher. >> what kind of market share do they have right now? >> .6 market share right now. it's extremely small,
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fragmented, and moving to the cloud and moving to sass. and before we heard these things back in the '90s and early part of the 2000s, move to client server. we're not going to talk about anything related to anything but cloud and sass in the next five years. >> these guys still have relationships with some of the people who are leading their clients? >> they do, and also a lot of ownership with the companies. they are invested. the company, again, if they execute -- >> i have to say, i've looked at it, it's a very cool company. >> it is. >> on a relative basis to what oracle has. it doesn't even compete in terms of the product. >> precisely. and if you look at the theme of how much market cap has been the -- the umbrella of market cap. and all the companies that oracle's bought over the last few years. that's a big umbrella. and if they gain a small percentage, this could be that kind of story. >> cbg -- >> the stock symbol for that.
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>> there's a big amount of consolidation back in the early part of this decade. they are one of the best at it along with hf. obviously real estate's getting better. commercial real estate's getting better. they plan all aspects of that. >> we've had some people tell us that real estate is going to peter out. particularly when you're looking at residential housing. interest rates will go up and that will change the dynamic. do you agree with that or no? >> i think we're almost at the infancy of real estate. i don't agree to that. i think, again, this is a commercial real estate play on finance and leasing. they're the best at it, it's global. they also have a property services as well as investment business. it's a terrific company run extremely well, and i like this market going forward. but i don't agree. >> you don't agree that the higher interest rates would actually -- >> you know, we're at historic lows, i do think rates will go higher. i've been hearing that for three or four years. they've been wrong for three or four years.
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i think it's natural that rates will inch higher because because we're at rebirth for residential real estate. and starting to see the beginning of that. >> let's talk about a biotech stock you like. >> it's a controversial name. >> because? >> they got approval for a drug, for a rare form of leukemia. there's been shorts talking about safety issues with it. mike king, our analyst who made best on the street this week which is terrific has read some information from the freedom of information act talking about some of those concerns. he's not as concerned as the rest of the shorts are. stock's gone down from the mid-20s to the teens, it's a $3 billion market potential. this could be a real big drug. and as a $3 billion market cap now, i mean, i think this could be an enormous story over time. could be a big winner. >> you sound very optimistic when it comes to what the prospects of the stock market are. >> i am optimistic. i think we've seen a long slog to get back to where we were in the peak of the market.
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i think you have a global economy that is getting better. i think the u.s. is leading the way. right now in innovation, you have some things like energy independence, like rebirth in the home building sector. you also, i think, have some things immigration policy. what i see a little bit as washington being more cooperative with each other. some bonding that hasn't happened in a long time. and those are recipes. >> two sides are going to meet and break bread with president and senators. they are agreeing to break bread. >> those are easy comparisons. if we see even the slightest hint that people are getting along in washington, i think some policies and other tensions that have been around for a while slowly evaporate, we could have a much better market. >> thank you very much for coming in today. coming up, stocks you need to watch at the open. including bank of america at the top of the hour. also, we've got a double dose of guest hosts this morning. rebecca patterson and steve berdoni of forbes, both going to
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be here to talk about the recent moves in commodities, metals and markets. stay tuned to "squawk." more coming up. time for verizon to report earnings. will the company meet, beat, or miss estimates? log on to our facebook page and cast your vote. results are out tomorrow morning. and then we reveal the results of our poll. it's armchair analyst. and it's only on "squawk box." i know what you're thinking...
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wow. perfect tortillas. did you see that? not everyone saw that. it was a local. but a perfect way to make tortillas. i'm going to order that. checking the futures right now. we come back from triple digits. my ears are totally clear of wax after using that. >> i don't know if all cnbc viewers actually get to see all the commercials. >> they don't see them all. >> you don't know -- >> i no longer stick things in my ear and hurt myself and jump like that guy. >> take the wax out. >> you had an issue. >> i had a wax issue. >> i can't believe you went to see a doctor in cambodia. >> i did. because i'd gone swimming. >> you know why people see doctors in cambodia, andrew? >> not because of swimmer's ear. i think maybe that's what you told other people. but we want to know.
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let's take a look at some stocks to watch this morning. if you go to cambodia and see a doctor, it's usually for some other kind of -- anyway. bank of america earned 20 cents a share for the first -- stay over there. 20 cents a share for the quarter. keep your coffee separate. i'm telling you. >> you're making him run away. >> no, don't do that. don't do that, go away. >> touch him. >> go away. did you wash your hands after you -- 20 cents a share for the first quarter below estimates at 22 cents. the stock was down. revenue slightly above forecast. profits, we're about four times higher than the year earlier due to cost cuts and less money set aside to cover bad loans. textron, earning 40 cents a share, excludeing certain items below expectations due to reduced demand for business jets. they also make helicopters and
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the current quarter is $1.90 to $2.10. quest diagnostics might have been one of the testing companies used to see what you had. the medical lab operator earned 89 cents a share for the first quarter. >> i went to get the -- >> in cambodia? >> no, no the in cambodia. >> no, that was something else. you're fine, right? >> i'm fine. >> well short of the consensus of $1.03. hurt by people cutting back on doctor visits due to the slow economy. mattell earned 11 cents a share for the first quarter, beating estimates by 2 cents. mattell also registered a 320 basis point increase in gross margins. and yahoo, yahoo. if we have her laughing, we've got to use it. >> there is a yahoo youtube -- >> was it a conference call? >> someone's done a compilation
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of her laugh. >> we need that. >> which may rival jeff besos in a different way. >> we're on it. >> 14 cents above estimates and current quarter revenue below street estimates. i thought you did an interesting interview with that guy. you know a lot about yahoo. we've got to go. more on the markets from our guest host, rebecca patterson. and federal agencies focusing on parts of the bomb found on the scene along the marathon route in boston. we'll be right back. but i wondered what a customer thought? describe the first time you met. you brought the flex in... as soon as i met fiona and i was describing the problem we were having with our rear brakes, she immediately triaged the situation, knew exactly what was wrong with it, the car was diagnosed properly, it was fixed correctly i have confidence knowing that if i take to ford it's going to be done correctly with the right parts and the right people. get a free brake inspection and brake pads installed for just 49.95 after rebates when you use the ford service credit card.
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details emerge in the boston bombing investigation. we will bring you the latest from law enforcement officials on possible suspects and bomb materials. plus the reaction in the markets. bank of america reporting. first number that the company's giving is 20 cents a share, net income of $2.6 billion. we've got an analyst to break down the results. >> volatility and equities and commodities. we're going to tell you what's driving moves in stocks, currency and gold. the third hour of "squawk box" begins right now.
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welcome back. welcome back to "squawk box" here on cnbc. i warned you. first in business worldwide. i'm joe kernan along with becky quick and andrew ross sorkin. >> good morning. >> we're looking at the boards. u.s. equity futures down 91 points now. better than they were before. but a little disappointing given that we got back like 160 points of that big selloff that we saw on monday. which was hard to -- before. once boston happened, it made sense. but before that -- >> it started before that. >> commodities going down should be good. but what it means is when you're losing money somewhere, you've got to sell it somewhere else. >> and that's why people thought something was happening. and the margin calls on some of these issues. we've been following a lot of stories this morning. we have earnings this morning from bank of america. reporting a quarterly profit of 20 cents a share, that was 2
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cents below what the street was expecting. revenue did come in slightly above consensus and the bank's earnings were about four times that of a year earlier because of cost cutting and because of less money set aside to cover bad loans. earlier today, sat down with the chairman of the $500 billion sovereign wealth fund. here's what he had to say about the economic slowdown in china. >> i don't think people should be panicking. the chinese economy will continue to grow at the sustainable level. the government's target could be fulfilled without much difficulty. and we aim at the quality of the growth. i don't think achieving 7.5% is a big deal. i don't think so. >> that's a big interview with the chairman of cic. and you can catch the rest of that interview on cnbc.com if you'd like to see it. in the meantime, let's take a look at the oversees markets. overnight in asia, you see the nikkei up 1.2%. you also saw the composite down by .5%. in europe, this is where it gets
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interesting. in germany, the dax is down by more than 1.6%. the cac also off by 1.6%. massive concerns there. we have rebecca patterson here going to tell us more about some potential downgrades and why that's rattling some of those markets. also getting details about the types of devices used in monday's bombing in boston. scott has more on that. >> reporter: good morning, becky. boston is slowly struggling back to its feet today with the exception of that complicated crime scene where authorities are still combing the scene for evidence. they have come up with important pieces of evidence. you're looking at pictures of fragments of the explosive device and perhaps the bag that it was carried in. the pressure cooker bomb works in a particularly diabolical way. basically they will glue
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shrapnel to the inside of it. things like bbs, nails, that type of thing. some of those also have been recovered. and an explosive device in the middle of it sealed up and detonated basically to maim and kill. and that, of course, is exactly what has happened. the explosions did exactly what the perpetrators set out to do. and by timing when they did several hours after the first runners crossed the finish line, they got in after the last bomb sweep, and that is also critical. authorities had appealed to the public for help. they say they've gotten a tremendous response, but still, they need more. >> we're asking anyone who may have heard someone speak about the marathon or the date of april 15th in any way that indicated he or she may target the event to call us. someone knows who did this. >> reporter: does that mean that the authorities know that
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little? or is there something more to it? rudy giuliani who made a name for himself in law enforcement says this may be part of a law enforcement strategy. >> let's hope they have more information and they're not putting it out because they're looking for some people and don't want to alert them to the fact they're looking for them. >> so, that could be very well, and as your guest guy said in the last hour, maybe they're trying to keep tit open. that is entirely possible. but authorities at this point are not letting on what they know just wanting the public to ask for help. it's going to be a while now before we get our next news briefing expected at 1:00 eastern time this afternoon. we're continuing to follow this. back to you. >> scott, real quick. you made a comment that i just noted. the idea that the last sweep had been done much earlier. when was the last bomb sweep?
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and is it possible that people would know when those sweeps would happen? is a good question. one that we asked the authorities at the news conference yesterday. is this something that they may have been planning for several years looking at the security situation which was beefed up here after 9/11 and it's unclear how much they change it from year to year. the thinking is that the last bomb sweep was done probably around the early finish, you know, the victors in this marathon. and that may be why they waited a while. while it was timed several hours after that to get in the last bomb sweep. the authorities aren't saying that. but you wonder what kind of planning went into this. >> okay. all right, scott. thank you. and we appreciate it and like we said, we'll see you later on the air all day long today. joining us for the next hour to weigh in on all of what's
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happening, rebecca patterson, chief investment officer at bessimer trust. i want to talk to you about what i think is pretty good summary of everything that's happening, rebecca, in a second in terms of why you're not sure this is the time to reduce risk. but what's happening today with you think this is due to word about downgrades? >> well, the b of a earnings were a little bit squishy, and we are seeing that stock down in pretrading, but doesn't explain the drop in the futures broadly. and i think right now we're in a funny market. we're concerned about china a little bit again. earnings so far have been okay. but we're getting some retail sales and some job numbers a little bit soft in the u.s. and so the market's vulnerable. it's nervous, looking for a reason to correct. and in the case of europe this morning, there's speculation we could get either an outlook or an actual downgrade for france and/or germany. that feels funny to me. i would be really surprised if that actually happens near term.
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>> why? >> the budget deficit situations, the debt situations in germany and france are certainly so much better than the rest of the periphery. why now? what has suddenly happened now? certainly growth there's very vulnerable. unemployment rate for all of europe, now 12%, a record high, the ecb's reluctant to ease because they don't think it'll actually help where it needs to help with lending small and medium-sized businesses. but those thing alone, to me, wouldn't justify a downgrade now. but it does to me, bigger picture, just remind us how nervous the markets are. i think that's the take away. >> you said going back to the things you said are somewhat positive. wealth effects, you've got home and equities. >> yep. >> although people think the consumer is not great and that it's still deleveraging. you've got politics, not as much of a head wind as it was. china slowing, but not a hard landing. >> right. heard that from the director. >> central banks are getting easier, maybe not here, talking
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tapering, the rest of the world getting easier. no reason to reduce risks in equities. that sum things up? >> that was nice. >> i'd take it and make it my own. what happened with gold then? >> wow. that is a crazy one. i mean, obviously friday and monday, there was no immediate catalyst. people are pointing to cypresi having to sell some gold reserves as a justification for that move and technical levels were broken. but still, why now, right? stocks are going down, gold should be going up, not down. i think you are seeing a stronger dollar, you are seeing the central bank selling worries percolate, soft inflation, that inflation risk isn't imminent, at least. so i think there are a number of things that are probably contributing real interest rates ticking higher in the u.s., making the opportunity cost of holding gold higher, all those things have contributed to gold falling. but 15% in two days.
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that gets your attention. >> meanwhile -- >> no inflation. >> you need the keyboard on your blackberry? >> oh, yeah, i'm a dinosaur. it's the keyboard. it is. >> you've got an iphone. >> i have an iphone. the touch screen. >> i hear ya. >> all the things that happened. >> we're going from gold to cell phones here? >> i had an iphone and gave it back. >> i did too. >> i got an iphone. >> so many things, that says nothing. >> i type a lot. >> you know what it is? you're talking constantly, yap, yap, yap, to each other. >> margaret thatcher time. you want something said, you ask a man, you want something done, you ask a woman. >> very appropriate for today. >> i take it back. you're right. >> the gold thing is interesting. >> a segue. >> there's no really new news. the inflation thing is not shaking everyone up. this 13% drop in two days is crazy. gold's supposed to be the safety
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net. and the safety net has a volatile of 13% in two days. it's kind of scary. if i'm not a gold investor. if i'm just a normal kind of -- do i care? yeah. should i be worried about this? if i buy the vanguard total stock market, do i care what gold is doing? does it affect me at all? is it fun to watch. is it fun to speculate? >> well, adds to the uncertainty. you see such a big move in something that's supposed to be so safe. >> it's so uncertain, makes you want to buy it. >> so uncertain, you buy -- obviously you don't buy gold for uncertainty. you buy treasuries. >> what percent do you think most people's portfolio has some gold in it? meaning is it 5%, 10%. >> it's a bullish case. that's the bullish case. >> sovereign wealth funds, the global average right now is 12%. which is not a huge amount. and for some of the big guys like china, singapore, saudi arabia, it's less than 5%.
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>> they don't care about this either? >> hurts them, but they don't care, no. for moms and dads who bought the etf, that matters. >> watching those ads a year or two ago. >> late night tv ads. >> your wealthy clients, do they have physical gold? >> some of them do, yes. absolutely. and in 2008 and 2009, i saw people wanting to buy bars and coins and bury them in their backyards. those people probably are still doing okay. they've probably still are up on that position. i'd say, though, for most wealthy individuals who own gold as part of the portfolio, it's somewhere between 1% and 5%. it's not huge. this move isn't hurting them much. >> during the crisis, they were calling on the billionaires asking about gold and they were saying, yes, i'm buying gold, it's in my basement because if stuff turns into the walking dead, they're going to buy potatoes and water. so even the super wealthy had this as an apocalypse hedge.
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>> and it doesn't have to be you're completely dead. it could be that your cerebral cortex has been eaten by some virus run amuck and all that's left is your brain centers. it doesn't have to be -- you don't have to be -- >> you're good. >> you don't have to be reanimated. don't discount. you were discounting this could happen. >> you know way too much about zombies. >> oh, i watch. i like to watch. >> right now, we're underweight gold. i'd say our portfolios right now have about a 1% positioning in gold. we reduced it in the fourth quarter of last year and moved some of that position into platinum and palladium. >> what was the highest you ever had it? >> probably 2% or 3%. >> that's it? >> not a lot more, no. it's part of the safety bucket. but it's a tiny part of it.
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>> a famous doctor discovered a cure for cancer and they thought it was working and the vaccination something being recombined with something else. >> they filmed that in my neighborhood. >> yeah. next thing you know, they were very scary zombies. rebecca patterson and steve bertoni will be with us for the rest of the show. bank of america shares lower following the quarterly earnings report. we'll dig through the report with financial analyst anthony polini. and more on the investigation into the boston bombing. we'll talk with former investigators from the fbi and department of homeland security on what's going on and what it all means. with fidelity's new options platform, we've completely integrated every step of the process, making it easier to try filters and strategies... to get a list of equity options... evaluate them with our p&l calculator... and execute faster with our more intuitive trade ticket. i'm greg stevens and i helped create fidelity's options platform. it's one more innovative reason serious investors
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welcome back to "squawk." bank of america out with first quarter earnings earlier this morning. and joining us on the "squawk" news line is anthony polini from raymond james. stock is down slightly this morning in premarket, anthony. what -- what did you see in the report that pops out to you? >> i think the biggest problem is they reported on the wrong
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day when we had a flare-up in concerns about german debt. this quarter on an operating basis was clearly upbeat. expenses were high. there was at least 4 cents i would call them in one-time items entirely in the quarter. and also, there were higher than normal severance expenses related to their cost saves initiative. so in our estimate, there's at least $1 billion in expenses that go away next quarter or add 6 or 7 cents on top of this number. >> when you think of the litigation expenses, that's a number people look at, especially given their history. >> yes, they're ongoing, but they're a positive catalyst in the sense that the one thing we feel very confident about is that those legacy mortgage/litigation expenses will be lower in 2013 than in 2012. so it's actually helping operating leverage as we go forward. >> and what do we make of the mortgage lending business, what
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it says about the broader economy and how they stack up to wells fargo, for example. >> well, wells fargo has dominated that market since the financial crisis. there was a time when jpmorgan and bank of america were number one and number two in originations. and now wells fargo originates more than twice the other two combined. so clearly wells fargo is the 800-pound gorilla in that market. however, b of a has a very large significant business. most of it is driven by existing customers as opposed to wholesale businesses. but it's an important part of their revenue stream. it did decline when you look at mortgage banking income. but it's a lower percentage of total revenue than it is at wells fargo and less likely, if you will, to cause an eps miss on any given quarter. >> you know, in the last hour, when the numbers first hit, joe and i were talking about merrill lynch, what's going on with the wealth management business and
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the investment banking business. walk us through it. >> it wasn't a blowout quarter from an investment banking standpoint. i mean, if you look at the investment in brokerage income, they were pretty much in line. i'd say investment banking was lower than expected. trading account was higher than expected, but given what we saw from jpmorgan in particular, we thought that number given those results could even be higher. looked like a quarter from capital markets standpoint that can definitely be repeated in the second quarter. >> you wouldn't say that the average merrill lynch broker right now is being flooded with interests about the stock market hitting new highs? it just doesn't look like that, does it? >> no, i wouldn't say that. >> well, sooner or later, merrill lynch should benefit if the individual investor ever gets back in and there's no evidence of that happening. >> i think it may have been a head fake. we thought the retail investor was coming back and then we had that disappointing jobs report
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of big decline in the treasury yield which is kind of the bell weather for our faith in the u.s. recovery as well as eps estimates for the banking industry. there's probably no one variable that's more meaningful now. >> volume's not great. it doesn't -- we're trying to gauge where we are in -- since we've set a series of new highs and feels like the bubble in the stock market. i don't know, the stock market doesn't feel like -- after 12 years we finally get above the old high, doesn't feel that frothy. >> i think we're stuck in low gear and i think we have brief periods of renewed optimism. >> what's your sense on where the stock could go? it obviously took a huge run and sort of treaded water for the past couple of months. >> 15 is certainly a reasonable target. one year from now, that'll be tangible book. and at that point, one year within earning. it makes a lot of sense that the easy move without going crazy on
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valuation methodology gets you to $15. >> anthony, it's rebecca. with b of a, but the other banks that have reported so far, are you seeing anything in terms of lending that would make you feel a little more confident about where the economy's going that all the money the fed is giving us is actually getting into the system? or is it still pretty slow? >> you know, i'm glad you brought that up because the distinguishing factor for b of a this quarter was actually on lending. they actually had decent loan growth. and everyone else had a much more noticeable decline. now, we did have a spike up for the industry in the fourth quarter due to tax law changes and just a seasonal spike. but b of a had better than peer loan growth. commercial loan growth was up 3.4% link to quarter. that includes international where they're taking share but u.s. loan growth was up in the quarter. loan growth at b of a certainly
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looks better than their megacap peers, at least this quarter. >> okay. anthony, thank you for your quick analysis this morning. thank you for calling in. i'm sure we'll talk to you again soon. in the meantime, coming up, we've got a high profile bust at an art gallery involved celebrity poker international money laundering and racketeering. more on that story next. and still to come, david blitzer, the chairman of the index committee for s&p dow jones when we return. but at xerox we've embraced a new role. working behind the scenes to provide companies with services... like helping hr departments manage benefits and pensions for over 11 million employees. reducing document costs by up to 30%... and processing $421 billion dollars in accounts payables each year. helping thousands of companies simplify how work gets done. how's that for an encore? with xerox, you're ready for real business.
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welcome back to "squawk box," everyone. among the stories we're following this morning, a global art bust at the gallery in new york's carlisle hotel. the fbi raided the flagship gallery on tuesday charging nearly three dozen people with racketeering, extortion, money laundering and illegal gambling. now, none of the poker players were named on this complaint, but charges also include money laundering through shell companies in cyprus, to and from russia, and into the united states. so this has all kinds of t tentacles. we'll update you later on "squawk on the street." when we come back on "squawk," though, an update from washington on a letter sent to senator wicker that contained the poison ricin, we're not really sure how to pronounce it.
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we're going to talk to former investigators from homeland security and the fbi about the latest in the bombing investigation. and take a look at the u.s. equity futures. dow futures down by about 86 points. s&p off by more than ten.
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welcome back to "squawk box" this morning. no government economic reports today, but investors are looking ahead to the fed's beige book. that's the region by region assessment of the nation's economy. it's going to be out at 2:00 p.m. eastern time. we're going to bring it to you then. procter & gamble wants to increase the time it takes to pay suppliers. such a move could free up up to $2 billion in cash. p & g wants to pay the bills in 75 days compared to the current 45 days. of course, suppliers probably not so happy about that. and american airlines is expecting normal operations today. that's following problems yesterday caused by a system wide computer outage. that glitch caused about 1,000 flights to be canceled and a similar number to be delayed. separately, federal authorities intercepting a letter containing the deadly poison ricin sent to
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roger wicker's office. the letter triggering more security concerns one day after the terror attack in boston. and eamon javers joins us live from washington with more. eamon? >> good morning, andrew, this is one we'll have to monitor throughout the day for new developments. but let me tell you exactly what when he know as of so far. they say it contained a white granular substance. the letter was addressed to senator roger wicker, a republican of mississippi. and the preliminary tests indicate that the substance here is ricin. the letter was postmarked in memphis, tennessee. didn't have any return address on it. but otherwise, officials say it was not otherwise suspicious here. the senate mail service has been suspended. they're going to go back and do a very detailed look at exactly what this substance is. guys, i've got to tell you, there's been a history of false positive tests, at least initially for this substance ricin. and of course, this potential attack, if that's what it is definitely reminds us of those
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days after september 11th up on capitol hill where you're dealing with the anthrax attacks in capitol hill and media organizations across the country. this is something that could be very, very scary. but they're going to go very carefully now and figure out exactly what the substance is. one of the senators up on capitol hill said late yesterday that she believes that they have a potential suspect in mind, a person of interest, someone who regularly sends hate mail up to capitol hill. they think they're going to focus on that person to start with. so, guys, something to follow for today. whether or not this retests as ricin and whether or not they can pin down a suspect who may or may not have sent this letter, guys. >> right. okay, eamon, we appreciate that. and we've been talking about the -- if you look in the dictionary, it spells out raisin. >> my source on this is the online dictionary.com, they have a pronouncer. >> an audio.
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>> an audio pronouncer. >> you click on the speaker thing and it says ricin. >> joe, you've got a science background. >> i should have known, but i don't. it's scary when you hear what it actually does. >> it is serious stuff. >> okay. thanks, eamon. the investigation. i have -- i'm still working on eamon. once i get that, the investigation into the horrible bombing at the marathon continues this morning. and joining us now is clark evan, former homeland security department inspector general in aspen institute's homeland security director and nbc analyst and former fbi profiler. we've gone back and forth this morning. and it appears that the way things are going -- and there's no -- we should -- we want to open it for who should be responsible. but it's a primitive bomb, is it not?
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was it less than you might expect from a very sophisticated group putting something together? >> yes, these were crude devices. there's no question about that. on the other hand, the iconic nature of the venue, the boston marathon, the fact that lots of people were gathered there, the fact that the bombs were apparently designed to maim people. all of this suggests to me an al qaeda-inspired attack. and my bet will be we'll find that a single individual is responsible for this. also, i should point out that the pressure cookers are commonly used throughout south asia, middle east, this is the kind of suspect we might be looking at now. >> clint, do you know anything that we don't know? or that we haven't heard on the air waves? >> well, we know that the authorities have found a lid to one of the pressure cookers on top of a nearby building. in essence, the force was so
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great it blew it on top of a building. we know that the pressure cooker, the one of the two devices that's been called a pressure cooker, it was 6 liters. in the u.s., we'd call that 1 1/2 gallons. but here's something that says 6 liters, so that could suggest the pressure cooker had been made internationally. we know that the battery that was found was from a company that's only been in existence about the last eight years. the batteries are produced in california as well as china. and we know that the recipe for building a pressure cooker bomb is one, for example, that a former u.s. soldier used two years ago to build two similar type devices that he was going to explode in a restaurant frequented by u.s. soldiers in and around the texas area. one of the ways he was caught was at a local gun store. a gun store that had sold one of
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the guns to the shooter at the ft. hood massacre. noticed the person coming in buying a large amount of gun powder, turned him into police. that led to this individual who had assembled these two pressure cooker bombs. >> wait a second. you say that the batteries are only manufactured in california and china. are they widely available? or is that where they're available and sold, as well? >> they're available by the internet. there's a lot of internet traffic for these particular type of batteries. the question is, and, of course, the fbi will be looking at it as soon as they know the make of the battery will be trying to find out if it's sold in stores locally or if it's only sold in the internet. realize that's one more lead, again, contacting this manufacturer and trying to find out who bought batteries, then who bought nails, who bought gun powder, who bought pressure cookers. this can all merge together and give us a face of this unknown killer.
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>> we've also gone back and forth on whether the authorities know more than they're letting on. different media is saying it's gone cold and that the trail's gone cold. yet, you know, mayor giuliani said that if you wanted to think -- if you wanted to make the people, the perpetrators think they were in the clear, that's what you would do. i mean, any idea whether they know more than what they're saying right now? >> well, of course we don't know for sure. but the good news is, a couple things really. one, it's clear to me there's been seamless cooperation among the federal, state and law enforcement officials here. that was not the case on 9/11. two, since 9/11 with the proliferation of social media devices, iphones, cameras, video cameras and the like on stores, the investigators now have access to thousands. i've heard three terrabytes that they're combing through. and i'm certainly optimistic.
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i'm even confident, i'd say that there will be something in that footage to indicate, to point to who it is who is responsible for this. and so it's my bet that the investigators are really honing in rather quickly on who is responsible for this. >> this is steve bertoni, if this drags on for weeks and months, what does that mean for boston psychologically. people going to workday-to-day. is this going to paralyze a city? or do you think people will go on with their lives if this person doesn't get apprehended for weeks or months or maybe even doesn't? >> as far as boston is concerned, i know that city very well. i went to college there, went to law school, it's a very, very tough city, it's a resilient city. a lot of sense of community. and i think we've already seen just in the last couple of days the city coming together, going about its normal business. the last thing that any city can do after being attacked by terrorists is to be paralyzed by fear. we have an open, free democratic
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society. we cannot allow terrorists to win. the odds are that terrorists will succeed occasionally on these terror attacks. the odds are against law enforcement officials. they're with the terrorists. but i really expected people to go about their business and that's a huge victory in the war against terrorism. clint, should we be doing more? more? is there something more to be done that we're missing? >> no, not in this investigation there's not. you've got every resource, city, county, state federal -- >> no, no, no -- >> i mean in the context of security. you go into an airport, there's so much security, go -- >> you go into a mall, you've got to go through metal detectors. >> what's the right balance given what's just happened? >> no, i think -- i think we've got a good balance right now. we don't want to become this repressive state where every step you take you're searched a second and third time.
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and realize, this was a 26.2-mile long venue with 25,000 runners who had backpacks and friends and cameras and, you know, you can't run all of those people through metal detectors. you have to rely on the good spirit of people. >> right. >> and you have to rely in this case on the eyes and ears of the public to help investigators if they see something, turn something in. the last thing in the world we want to do is cave in to have one madman -- >> hey, clint. >> one single interest terrorist do this. >> the time square guy, he was potentially a single member of a cell or something. was that a rudimentary primitive bomb he had at time square too? >> yeah, realize he was just one of a number of individuals since 9/11 who have tried to carry this off. the underwear bomber, the time square bomber. all of these guys were really inept. but the time square bomber also had a pressure cooker device in
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his car. thank god that didn't go off too. >> okay. and it's funny because depending -- we're all americans now, we're hearing that, and no republicans. there are certain depending on the sway of the media, there are people that are really hoping this is domestic because they have perceived some type of profiling abuses in the past. and they're just -- i just read it on one of those things just praying that it's a white domestic terrorist so we don't once again tarnish. so people actually have skin in the game on who they're hoping the perpetrator is, which is a sick thought in and of itself, this guy that wrote it. i don't really think much of. but, you know, that's where we are. you have your own predisposed belief as to whether it's domestic or international based on something. anyway -- >> and what we've seen -- and what we've seen many times recently are hybrids. we've seen individuals that are
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either u.s. citizens or have become u.s. citizens or in this country for some study or work purpose. but they've become radicalized by the internet, by their own personal belief systems. so we have this hybrid of beliefs that have led. >> exactly. all right. we just don't know. and it should remain large. but there's people on the left that are hoping it's a militia and people on the right. it's sick. anyway, gentlemen, we appreciate it. thank you. >> thank you. >> crazy world. >> thank you. >> how long did the coming together -- never lasts. when we come back, we'll put some perspective on this week's market moves, maybe some historical context, as well. we'll talk to david blitzer, the chairman of the index committee. and tomorrow, quarterly results from verizon.
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uh
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uh. welcome back, everybody. joining us now from his offices in new york is david blitzer. managing director and chairman of the index committee. we've seen some moves this week, particularly in gold that have people scratching their heads. i know this was the biggest drop that we've seen in 30 years when you're looking at a percentage
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on gold. also saw a pullback in stock. and people are trying to figure out how big of a deal this is. what do you make of it? >> largely i think it's more noise than signal or -- and it's a lot of gyrations in the market fluctuating as much as anything else. it's wednesday morning and i think we've had enough action in the last two days to last us the rest of the month or something. >> let's take the rest of the month off. >> i'd love to do that, but unfortunately, it won't work. i think behind it, there's some economic signals that are worth paying attention to. it was concern about chinese growth and the chinese themselves have been warning that their growth will slow. they're not going to do 10% gdp growth year in and year out over the next 20 years they've done like the last 20 years. >> we did see that number up 7.7%. that was a concerning number, but i also saw people kind of complaining about, wait a second, this is from a bunch of people who chronically lie about the numbers.
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so if they're admitting 7.7, what does that really tell us? >> maybe it's a touch lower than that. maybe it's a touch higher. but we've been hearing for a long time, and i think correctly that first of all, there are labor issues coming up. they've had people moving off farms into manufacturing for three decades. they're going to run out of farmers in a sense. productivity won't surge as much and they're beginning to get ready to convert themselves to a consumer economy. and all that means that they're not going to be this huge sucking sound of all natural resources in the world going to china is going to quiet down. on the u.s. side, you know, we had a scare at the beginning of the month about the employment report, only 88,000 jobs. truth be told, the typical revision is about 50,000. could have been as low as 30, as high as 130. and so on. unfortunately, you have to wait for another couple of months of data. the economy is better than that number suggested. but it's not booming. industrial production was up,
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but a little bit soft yesterday. housing starts look very strong. it's largely apartment construction. so moderate growth, i think, is still here for the economy. >> is the market at a fair level given the moderate economic growth that you're talking about? is there more room to run? or do you think it should drop from here? >> i think it's -- i think it's a fair level. p/e ratios, 15, 16, 17 on the s&p 500. using more restrictive measures, the number's a little bit higher. we're probably a touch below the average p/e from the last 25 years. which means we have room, you know, it's not like when the is 12 and it's about to surge. but it's also not like a p/e of 25. i think it's got some room. but that doesn't mean you won't have some reversals. gold is more fascinating beca e because, you know, there are some arguments that gold was a bubble or is a bubble.
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it's left behind any fundamental values and so on. maybe $500 behind or something of that sort. and it's -- >> $500 from where it is now? or $500 from where it is last week? >> well, i was thinking of, you know, where it was when it was a lot lower before it surged. and so on. you know, the gold has got to be a motion. the economic value of gold in terms of electronics or even jewelry doesn't seem to buy much -- bear much resemblance to the price today, yesterday and last week or last month. >> all right. david, great talking to you. >> thank you. >> thank you. >> okay. coming up, a closer look at the stocks on the move ahead of the opening bell. we'll check in with jim cramer coming up next when we return. revolutionizing an industry can be a tough act to follow,
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welcome back to "squawk
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box." jim cramer joins us fro the new york stock exchange. good to see you, my friend. i need to know two things from you. how do you feel about yahoo and marisa meyer and someone was comparing this to jcp. >> oh, please! >> i wanted to get your view and then i want to know what you think about bank of america. >> first of all, i like what meyer is doing. >> the big problem at yahoo is a big culture, and i also like the idea of no more jumped up sight in order to please the advertisers and upset individuals who look at it and the numbers -- the engagement numbers are up very big in terms of the number, so i like that quarter. we have to wait for the conference call because on the surface it doesn't look that good and it's not that bad. it's just on every one of these quarters, the conference calls determine things and not the release, andrew. by the way, i like what you said about gold, just the percentage in gold and that was a good comment, and i thought you were
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spot on with that. >> back to b of a for just a second. is there anything that says about the broader economy and about the housing and everything else? >> no. it's much more how law firms are doing. it's kind of a law firm in itself. bank of america is still cleaning up. i think merrill is a great firm, and i keep waiting for per toil break out the way we've seen it with j.p. morgan, but it hasn't happened yet. the conference call for these guy, if you say listen, here's what i say about the release they will will contradict on the conference call especially because that's what i did with wells fargo. i looked at the release and made a determination and the determination was wrong and i don't want to do that with bank of america. >> give me one more. i need intel. jim cramer on intel. >> i felt bad. this has become one of those contentious companies where the analysts give intel a hard time about pretty much anything, and it's a dead horse beatdown.
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stacy -- is a really great guy, but the conference call has become acrimonious and it's a shame because it's a great american company. >> do you think the stock will turn around? >> um -- no, it's just the macro. they really don't have anything. boy, it was bad for dell. that was my real takeaway. i can't believe anyone wants to be in dell. by the way, there's a real crossfire, bernstein said there would be upside surprise and last week they said be careful, microsoft shh will take away from microsoft. >> isn't that the whole issue? >> well, the problem is intel they said on the call, hey, listen, guys, wrong product, wrong time, wrong war, wrong this, wrong that. it's almost as if intel was never any good and talking about 2009 numbers versus now and spending too much money on equipment and he's a good guy, but he's just down there giving intel the business. >> jim cramer, thank you very much, sir.
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stock of the day, textron, that was 5 cents below expectations. all of this due to a weak demand for business jets, and the decline in military sales. we've got a little time and let's get to our guest host, rebecca paterson for a couple of last words. we have 25 seconds. >> okay. i can do that. two final words. i think what we're seeing this week remind meese that you need to have diversification of portfolio. if you own only gold or only stocks you're not very happy. you need to spread your bets. the second thing reminds me that we're still interconnected. the u.s. is doing well, but china affects us, cyprus affects us so you need to take a global view of things and connect the dots before you invest. >> same thing. ignore the noise. >> read